Credit Card

What Is A Credit Card?

A credit card is a financial instrument that has a pre-loaded balance that the cardholder can use to make transactions and pay for them later. The card issuer will let you pay off the balance fully, interest-free, for up to 50 days from the date of payment. To avoid any fines, the cardholder can pay the minimum amount due (which can be anywhere between 5% to 10% on the total amount owed). The balance, however, will be carried forward to the next month, and interest set by the credit card company will be levied.

How does A Credit Cards work?

A credit card gives you more time to pay for your purchases. Every time you purchase on your credit card, you are in effect borrowing that money from the credit card issuer until you pay it back at the end of the month. Here are some things to know before you get your own credit card

1. Credit card companies give credit cards to individuals who have a consistent income.

2. If you have a good credit score, you can get a credit card easily.

3. You can obtain a credit card against your fixed deposit.

4. As a credit card holder, you will be allocated a credit limit, which will be 3 to 5 times of your net monthly salary. This will vary across different banks.

5. Although a credit card is provided by popular banks, the payment gateway is facilitated by Visa, MasterCard and RuPay. However, these payment facilitators cannot set other terms and conditions on the card. Features such as minimum due amount, interest rate, reward points, etc., are fixed by credit card issuers.

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